In a bid to expand its electronic commerce offerings, M&I Data Services has agreed to buy the electronic banking division of Automatic Data Processing Inc.

The 300-person ADP unit sells cash management products that let corporations gain access to their banking information through the Internet, personal computer, or telephone. Its annualized revenue is $40 million.

M&I Data, which did not disclose terms of the deal, said it plans to combine the ADP unit with Moneyline Express, a bill payment and presentment service it bought from Travelers Express Co. in January.

The combination puts the data processing subsidiary of Milwaukee-based Marshall & Ilsley Corp. in a position to handle more electronic delivery and payment of bills.

Payments by people connected to the Moneyline Express service could be sent directly to corporate users of the ADP products, said one observer. And bills could be transmitted from the corporations to the consumer.

M&I Data, a $413 million operation, is "trying to build itself into a real competitive force" in the emerging bill payment and presentment market, said Bill Burnham, an analyst at Credit Suisse First Boston in San Francisco. "Between this and the Travelers acquisition, they are clearly going after Checkfree," he said, referring to the Atlanta-based leader in the bill payment field.

Michael Hayford, executive vice president of M&I Data, said, "We haven't announced and finalized how we are going to" link the Moneyline and ADP businesses.

"This is a great opportunity for us to be able to establish ourselves as a leading provider of these technologies to banks. There is a growing acceptance of electronic bill payment."

Mr. Burnham said Roseland, N.J.-based ADP is leaving the electronic banking business because the company views it as outside its core service offerings.

ADP generated $1.3 billion of revenue in its second fiscal quarter, which ended Dec. 31, the bulk of it from payroll processing. Eighteen of the 20 largest banking companies and 120,000 businesses of all sizes use the company's cash management software and services.

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